CMS proposes revoking ‘Most Favored Nation’ drug pricing model

The Biden administration is proposing rescinding a Trump-era model that ties Medicare Part B drugs and biologicals to the lowest price that drug manufacturers receive in other wealthy countries.

Known as the Most Favored Nation Model, the initiative matches payments for Medicare Part B drugs to the lowest price paid by any country in the Organisation for Economic Co-operation and Development that has a gross domestic product per capita that is at least 60% of the U.S. GDP per capita. The goal of the model —which focuses on a set of around 50 drugs that represent a high percentage of Medicare spending — is to rein in rising drug prices.

In the Centers for Medicare & Medicaid Services’ proposed rule issued Friday, the agency announced its plans to rescind the model. CMS noted it had received approximately 1,166 pieces of correspondence related to the model. Nearly all commenters agreed that high prescription drug costs needed to be addressed, but a majority also expressed concerns about starting the model during the Covid-19 pandemic.

“If finalized, our proposal would allow us to take time to further consider the issues identified by commenters and would address the November 2020 interim final rule’s procedural deficiencies by rescinding it,” CMS stated.

The Most Favored Nation Model was made effective through an interim final rule published Nov. 27, 2020. It was slated to run from Jan. 1 of this year to Dec. 31, 2027. But the rule, and therefore the model, was never implemented.

In December 2020, four lawsuits were filed related to the interim final rule and the model. A federal judge issued a nationwide preliminary injunction in one of the lawsuits, barring the rule from taking effect on Jan. 1 as intended.

Providers have also made their opposition to the rule clear. Last November, the Medical Group Management Association’s Senior Vice President of Government Affairs Anders Gilberg said that the model will cut payments to medical practices that are treating some of the nation’s most vulnerable patients. Later, the American Hospital Association urged CMS to immediately withdraw the interim final rule and “replace it with a serious effort at drug pricing reform.”

Further, providers claimed the agency failed to follow proper procedures in promulgating the model.

Providers heralded CMS’ proposal to nix the model.

“We have long opposed mandatory and untested models,” said MGMA’s Gilberg, in an email. “When this model was first announced last year, we were perplexed to see that the onus was on medical group practices rather than drug companies to ultimately solve the issue of high drug prices in this country. If this model went into effect, it would have threatened access to care for some of the country’s most vulnerable patients.”

CMS is now exploring new opportunities to address the high cost of Medicare Part B drugs, manufacturers’ pricing and the consequent growth in Medicare drug spending.

“We will continue to carefully consider the comments we received on the November 2020 interim final rule as we explore all options to incorporate value into payments for Medicare Part B drugs and improve beneficiaries’ access to evidence-based care,” the agency said in its latest proposed rule.

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